This approach lim­its customers’ need to invest in data stor­age and server infrastructure and yields a highly scalable solution that doesn’t require massive capital spending to support new users or applications.

Central hosting also ensures that all users within the organization can access the most up-to-date version of the soft­ware, relieving IT departments from the time-consuming process of updating the programs on each individual computer.

And delivering software applications over the Internet meets users’ increasing demand for access to mission-critical data and functions on smartphones and tablets.

Our favorite software play stands to benefit from its ongoing transition to a SaaS model and its impressive leverage to growing adoption of the internet of things, a powerful growth theme.

PTC (NSDQ: PTC) brought the first commercial computer-aided design (CAD) product to market about 30 years-ago and the first web-enabled product life-cycle management (PLM) solution in the late 1990s.

The Windchill suite helps engineering departments manage and collaborate on product design by providing a central repository for pertinent information—for example, CAD models and various forms of documentation.

We expect PTC’s leading capabilities related to the internet of things and augmented reality to drive impressive revenue growth in coming years and make its legacy products even more compelling.

Management estimates that this business could grow by 30 to 40 percent annually and become as large as the CAD market over the next four to five years.

Accelerating adoption of machine-to-machine communications reflects the profusion of inexpensive sensors, data storage and processing capacity, as well as strategic goals among manufacturers, such as educing factory downtime, improving product quality, and boosting profit margins by utilizing sensors and predictive analytics to optimize maintenance and service schedules.

PTC’s ThingWorx platform has emerged as one of the leading software solutions for manufacturers and other industrial companies seeking to make the most of the big data generated by smart, connected products.

More important, ThingWorx enables non-hardcore programmers to build applications that process, sort and analyze the data generated by the connected factory and product to enhance the efficiency of manufacturing facilities and predictive maintenance on their output.

Given the reams of data generated and the number of apps that can be created, this software can reduce the time and cost of taking full advantage of the internet of things.

ThingWorx has gained impressive traction with industry heavyweights. In September 2015, PTC announced a partnership with General Electric (GE) whereby customers in its “brilliant manufacturing” program would use ThingWorx to build their capabilities in the internet of things.

The success of ThingWorx also helps to reinvigorate PTC’s CAD offerings by feeding live data from connected devices to conduct statistics-based analyses or physics-based simulations.

PTC has also invested heavily in its augmented- and virtual-reality capabilities. With Vuforia Studio, engineering teams around the globe can analyze a product in a virtual room while viewing real-time data on its performance and writing notes in the air around the product.

Other applications include authoring and publishing augmented reality experiences that serve as product manuals and/or service guides.

Still early in its profit cycle, PTC rates a buy up to $56 per share for aggressive investors seeking leverage to accelerating adoption of the internet of things.